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[Focus] Accelerated gov¡¯t spending to boost economy

Posted January. 05, 2001 13:05,   

한국어

The government plan for early implementation of the national budget to recover consumer confidence and to boost the regional economy, which was announced Thursday, is a sort of an action plan of 2001 economic management guidelines released at the end of last year.

Government officials anticipate that the first quarter will be the toughest period with weakened consumer and investor confidence, and an expanding income gap among regions. For this reason, it includes many plans designed to inject vitality into regional construction businesses.

"The early implementation of the budget is intended to stabilize the economy through national finance and it is a restrictive economy-boosting measure, as it does not accompany a financial deficit through drastic revenue increase or tax cut," explained a government planner.

However, some criticize that it could result in delaying the restructuring by focusing on boosting economy.

Here are sector-by-sector highlights of the budget allocation:

Early implementation of the budget:

Of this year's total budget of 160.3 trillion won, the government plans to use 63 percent or 101.1 trillion won during the first half. In particular, 18.7 trillion won of 21.8 trillion won set aside for economy-boosting measures such as investment in social overhead capital, financial aid to small and-medium-sized venture firms and public labor projects will be spent during the first half.

Early implementation of special subsidy to rural economies:

During the first half, 70 percent of 931.2 billion won set aside as special grant and 70-80 percent of regional concession fund will be released in order to boost the regional economy, including investment in SOC projects.

Early purchase of products manufactured by small and medium enterprises:

Of the projected 37 trillion won worth of product purchases, 70 percent or 26.1 trillion won worth will be purchased during the first half.

Boost regional construction business and housing construction:

This year's budget to improve residential environment, which amounts to 200 billion won in 100 districts, will be released by Jan. 31. Financing for housing reconstruction projects will be provided from Jan. 15.

For the Hwasung planned town development, the government will designate a development site by the end of March, and a detailed development plan will be worked out by the end of 2002's first half.

Construction of houses for lease will be increased to 15,000 units from the previous 10,000, and the relevant sites will be secured during the first half.

Aid to regional small and medium-sized enterprises:

The government will allocate 23.6 billion won for redevelopment of traditional markets and 81.3 billion won for improvement of market facilities during the first half. Also, it will support informationization of 10,000 small and medium-sized enterprises by forming a so-called informationization support unit in February.

More than 60 percent of the fund set aside to foster regional small and medium-sized enterprises, which amounts to 360 billion won, will be released during the first half. Venture capital amounting to 1 trillion won also will be financed to regional venture firms.

Special measure to solve debt of agricultural and fisheries villages:

A policy loan of 3.9 trillion won that is to mature between this year and 2003 will be allowed to repay in five years with a two-year grace period. Besides, an additional 1.1 trillion won will be provided as a fund to improve management of agricultural and fisheries sector.

Financing for investment in facilities and technology development:

In January, the government will study ways to lower the interest rates of policy loans to be provided for facilities investment. Also, the facilities financing, which is provided by the Korea Development Bank, will be increased to 5.3 trillion won in 2001 from last year's 4.5 trillion won.



Kwon Soon-Hwal shkwon@donga.com